The court which sits in Luxembourg found that
under EU law the State had an obligation to protect the pension entitlements of
workers in the event of a company becoming insolvent. The protection is provided
in the 2008 Insolvency Directive. It rejected the Government's claim that the
State contributory pension should be taken into account in assessing how much of
the lost pensions should be made up following the insolvency of Waterford
Crystal and its pension fund in 2009. In May of taht year 2009, a request for a State guarantee on a
€39m loan was rejected by the Irish Government, while the company had debts in
excess of €470m and a significant deficit in its pension fund. Waterford Wedgwood, the parent company, claimed that Government assistance would
be akin to the public bailouts of Northern Rock in Britain, Bear Stearns in the
US and the rescue in the 1980s of Insurance Corporation of Ireland.
When a receiver was appointed in July 2009, 1,500 workers were told they would receive only between 18% and 28% of their full pension entitlements.
The court criticised the Government for not fulfilling obligations which were imposed following the judgement in favour of an English woman who brought a similar case against the UK in 2007, before the Insolvency Directive was introduced. On that occasion the court ruled that the woman, Carol Robins, should have received more than 49% of her pension entitlements after a double insolvency - - the bankruptcy of a company and its pension fund.
The judges ruled that offering retirees half of what they had been promised under a defined benefit scheme does not amount to protection by the state. It said the economics situation of Ireland does not constitute "an exceptional situation capable of justifying a lower level of protection of the interests of employees as regards their entitlement to old-age benefits under a supplementary occupational pension scheme.”
The lawyers who represented the Waterford
Wedgwood employees in their case welcomed today’s decision by the European Court
of Justice that the Irish State has an obligation to protect the pension
entitlements of Waterford Wedgwood workers after that company became insolvent.
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